While the 80 million American Catholics make up only 6 percent of their church's membership worldwide, their financial contributions — as much as a third of the Vatican's annual fund-raising for the pontiff's charities — has long given them a special place at the Vatican.

But a combination of changing demographics, sex abuse scandals and disputes with Rome over issues such as married clergy, female priests and homosexuality could threaten that status.

Before he became Pope Benedict XVI, Cardinal Joseph Ratzinger made his reputation as the Vatican's enforcer of church doctrine, and early indications are that he intends to emphasize strict adherence to those church teachings. If he does, many liberal American Catholics may fight back with the strongest weapon they have — their pocketbooks.

The demographic squeeze has been building for decades — each year, there are fewer and fewer nuns and priests available to provide low-wage labor to run church institutions. In 1965, there were 180,000 Catholic nuns in the United States. Today there are fewer than 80,000, with an average age of about 69. The number of parishes without priests has increased five-fold in the same period.

Now those workers must be replaced with lay workers, at more expensive lay salaries, putting the squeeze on church finances.

But the clergy sex abuse scandal is an even more immediate threat. According to BishopAccountability.org, which tracks abuse cases in each diocese nationwide, the scandal has cost the church more than $700 million, although it is unclear how much of that was covered by insurance.

A bankruptcy threatAnd a bankruptcy case in Oregon could make a bad situation even worse.

Having paid out $53 million in settlements and facing many more lawsuits, the Portland diocese (followed by dioceses in Tucson, Ariz., and Spokane, Wash.) filed a bankruptcy petition last year, claiming it had no more assets available. Archbishop John Vlazny told reporters, "The pot of gold is pretty much empty.”

Lawyers for abuse victims immediately challenged that claim. Attorney Michael Morey, who represents more than a dozen alleged abuse victims, estimates that the church owns 100 pieces of property valued at between $300 and $500 million.

The church insists that under centuries-old canon law, most of that property belongs to local parishes and cannot be sold by the diocese. But lawyers for the abuse victims say that distinction has no meaning under U.S. law. "To have legal existence, [the parishes] have to be a person or have a corporate structure, and they are not," Morey argues.

It's traditional, but is it legal?
Traditionally the Catholic Church has been careful to separate its religious hierarchy, dominated by the pope and the Vatican, from its financial structure. Each of the 3,000 dioceses worldwide manages its own real estate, investments and contributions, and within each diocese, canon law carefully separates parish collections from those of the diocese.

That separation of the Vatican's religious authority from local church finances dates back to the early days of the church. At a time when it took months for a letter to travel from Paris or Mexico to the Vatican, popes did not want to be held responsible for the financial plight of individual dioceses.

Because of that structure, lawyers suing the church on behalf of sex abuse victims have been unable to sue the Vatican itself.

The separation at the parish level followed the same pattern. "There were not many priests, and they came on horseback infrequently, so it made a lot of sense for the parishioners to take care of the church themselves," said Joseph Harris, author of "The Cost of Catholic Parishes and Schools" and an accountant who tracks church finances.

If attorneys for abuse victims convince the Portland bankruptcy judge that distinction is false, it will give the lawyers a deeper pot of money to go after in seeking settlements. And the threat of being forced to sell local parish church or school property to pay for settlements could bring the impact of the abuse cases much closer to average Catholics.

Disillusioned
Fallout from abuse cases already has disillusioned many Catholics. In some dioceses, parishioners learned that church leaders had responded to complaints of abuse against priests by transferring those priests to another parish, without proper monitoring or any warning to the parishioners.

In some instances, the church's attempts to settle the complaints added to parishioners' ire. Boston Cardinal Bernard Law, for example, initially hinted that the diocese didn't have enough property that could be sold to pay for a settlement, and threatened to take the diocese into bankruptcy.

But Law was embarrassed by a Boston Herald examination of property records that showed the church owned properties assessed at $160 million that were not being used for church purposes. He eventually was forced from his post, and the diocese sold the cardinal's residence to help fund a settlement.

"People are troubled with the level of transparency in the church. They're looking for more openness," said Francis Butler, president of Foundations and Donors Interested in Catholic Activities (FADICA), an organization of lay Catholic charities. "Some dioceses and parishes are responding, but some are not."

Vatican could feel the impact
If U.S. parishioners show their displeasure with the church hierarchy at the collection plate, the Vatican will soon feel the impact.

American Catholics donated some $20 million per annum in recent years to the Vatican's general revenues, FADICA president Butler said. And they added $20 million more to Peter's Pence, the pope's traditional fund for his charities, which had worldwide donations of $55.8 million in 2003. When Vatican finances veered sharply into the red in the 1980s, church officials turned to Peter's Pence to cover the shortfall.

The Vatican is already in the red, though how serious the financial difficulties are remains unclear.

Last year, for example, the Holy See reported a deficit of $11.8 million for 2003, the last year for which information was available, with income of $250.2 million and expenditures of $262 million. The Vatican city-state, which has a separate budget, ran a 2003 deficit of $10.8 million on revenues of approximately $200 million.

Closing that deficit won't be easy.

"The biggest problem facing the Catholic Church is its inability to raise money," said accountant Harris. He notes that American Catholics on average give only 1.4 percent of their household income to the church, much lower than the U.S. Protestant average of 3.5 percent.

"This is going to require that Catholics around the world become more generous," said FADICA's Butler. "But in this climate, given what we're seeing in the dioceses, I don't know if that is possible."